As businesses spring back to action for in-person, we find ourselves in a different world of financial approach, pricing strategy, and service delivery. Specifically, how to be profitable when everyone is looking at every penny they are spending.
One of the most puzzling pieces to me happens after we put together an absolutely stellar creative proposal, put numbers against the engagement, win the business, and close the business. Only then do our clients begin to question pricing strategy and our fees.
Following the development and execution journey is an interesting one.
- Big RFP comes in with (often) two weeks or less to respond
- POP | X puts a team together of at least three people to ideate, illustrate, render, source, and price over the course of that two weeks; figure 30-40 hours invested in the proposal alone
- Deck is created and presented to client stakeholders
- Client comes back with questions and requests revisions based on internal feedback
- POP | X creates the revisions; let’s say we put in another 10 hours
- Client (if we’re lucky!) accepts the creative proposal and general parameters of pricing and we win the business
- POP | X fine tunes the financial aspects of the engagement as specific items that have been approved are finalized and documented
And then the fun begins! (Let’s not forget that we already have 50-60 hours invested in the proposal without any guarantee of winning it – dollars spent on internal and external team members that are not recoverable. It is our investment in the potential and we are happy, willing and able to spend it.)
It is at that point that we begin to have to justify our pricing strategy:
- Why are your hourly rates what they are?
- Do you mark up actual costs? If so, why?
- Why do you charge a management fee and what does it cover?
Having been on the client side for as many years as I have been on the agency side, I can honestly say I was one of those clients. The recognition I placed on the agency’s deliverables were so undervalued and for all of those agencies and vendors I did that to over the years, I apologize!!!!! But in defense, admittedly, I, like most corporate event professionals who work for large organizations, was very far removed from my company’s internal profit centers and wouldn’t/couldn’t/shouldn’t be privy to how that company earned its profit in terms of pricing strategy against costs for goods and services. We would collectively applaud quarterly and annual stellar earnings. Well, how the heck did they get there? By turning a profit!!!!
What really goes into the execution of a stellar event both client-facing and behind the scenes is a monumental task and justifies the fee structure – at least ours! Not to mention, that we, like our clients, have profit goals we must hit in order to be a viable, healthy, risk-averse, and successful partner to them.
- Calls, meetings, emails, and texts happily responded to at all hours of the day and night – most of what is not billed for as it is anecdotal and often not planned
- Regular and ad hoc meetings throughout the life of the event
- Keen and consistent negotiation with production partners to ensure not only the best price but the absolute best value and outcome
- Production and management of the job itself pre-event, on-site, and post
- Leveraging years of experience to stay ahead of problems and challenges before they occur and meeting regularly with internal agency team members to ensure everything is going to plan
- Handling ad hoc requests that were never part of the agreed-to Scope of Work but that we know is important to the client; often clients don’t think they ought to pay for the hours for these additional services – but we incur them nevertheless
- Running our business – insurance, software, staffing, marketing, sales expenses, workers compensation, licenses, certifications, payroll, payroll and other taxes, HR…just to name a few
- And then there’s that little thing called profit. Yes, we do this because we love it but we are entitled, like everyone, to make a profit.
And that’s just the tip of the iceberg! When procurement is involved, it becomes even more challenging as oftentimes so much of what is considered a win for the company has to do with straightforward costs so we find ourselves having to lower our pricing to win business when the more sensible thing to do is to compare value investment, not just cost of the project. And we cross our fingers in the hope that the sales or marketing stakeholder even gets to see the wonderful content and context of our proposal beyond procurement.
And last on this, let’s look at life in general. Unemployment rates are low and great talent is a) difficult to find, b) a bit apathetic about working the crazy hours required for events, and c) more expensive. Absolutely everything is more expensive everywhere; even a simple tablescape that used to cost $50 is now more than double that. And the service sector of the hospitality industry is so slim that we have to be sure to bolster our on-site event teams to cover for what may be missing at a property or venue.
The challenges abound.
The bottom line is that we are very proud of what we do and the experiences we create for our diverse array of clients. And we are passionate, enthusiastic, and joyful always. And what you get from us — a really wonderful boutique agency — is tough to beat: no red tape, no surprises, no big overhead, no constraints, and unbridled creativity. And handling our clients with great care and respect.
Our (very simple) expectation at the end of the day is to be both treated and paid fairly for the work we do – so we can continue to do it!